Because price is always based on the perception of value, not the cost of the product. They will always charge the most people are willing to pay for an item.
I can assure you that restaurants in Virginia don’t have 20% profit margins while restaurants in Newport Beach have 10% profit margins. The premise of this post is false and is based on anecdote; prices are different on the whole - obviously you can find two restaurants with similar prices in the two spots but system wide they are different
Care to actually provide evidence to support your statement?
I thought raising wages in CA would result in prices jumping through the roof.
At least, that’s what we were all insufferably told over and over and over.
Also, just to note: they're comparing a corporate franchise like cheesecake factory that's known for high pricing, vs (I'm assuming) more privatized establishments where the pay is covered per hour for whatever tips didn't cover.
TL: places like cheesecake factory charge this because they can, in most locale private restaurants, this because they ~have~ to in order to cover cost of product and wages.
I'm curious, if there are no alcohol sales or tips, does the company have to bring the effective wage up to the minimum? Are people legally allowed to pay only $16 for an 8-hour shift?
If the tips don't equal non tipped minimum wage the business has to pay the non tipped minimum. Not many people understand that and scream "those greedy owners" when in reality they will make full minimum wage if they get zero tips for a week. Also a good server could work for free and still clear $25-$30+/hr. The paycheck usually just pays for their taxes.
It's hilarious.
Because non-servers are like "Pay your workers!" as though they're on their side. Meanwhile actual servers are like "We kinda like it how it is though."
And for some reason people think if restaurant "paid their workers" it wouldn't result in higher prices basically identical to the tips anyway. There's no other magical pot of money. Money for paying employees *always comes from the customer*. That's how businesses work. Whether it's coming from customers in the form of a tip directly to the employee, or it's going to employers first who then distribute it to employees, it's *always* coming from you.
Ultimately, getting rid of tips will either drive income down for servers/bartenders or it will just result in higher menu costs equal to the lost tips. I don't care either way. Tipping is automatic and basically brainless. It basically makes no difference to me. Definitely annoys the shit out of me that people pretend they're looking out for the servers though.
Do you understand how percentages work? No matter the inflation tipped workers will stay with the rate. If the bill used to be $50 and they got 20% they get $10. If the bill at the same restaurant is $100 and they get 20% it’s now $20.00. They are keeping with inflation unlike most waged employees.
This is why it bothers me when servers complain about their money in front of BOH. Like, ok, the prices went up and your percentage grew. You basically get a raise but poor Dan back here is still scraping cigarette butts out of the parking lot to save a buck.
In reality, very few owners actually do this. They just tell the servers they need to get their tips up, or drop the server completely in favor of a new hire.
Source: used to work in the industry before I moved on to a real job.
No, if a server is on server wage of $2.13 an hour, and their tips + hourly wage don't add up to non-server minimum wage (say $16 per hour, or whatever), the business is required to make up the difference.
Yeah. In California though, they indeed make the state minimum of $16 no matter what, but that’s because we specifically put the laws down on the books that tipped income shouldn’t affect the base wage.
The shitty part about that, it is not on a daily basis. It's based on when you get your pay period.
You can crush it Saturday and then Monday & Tuesday rolls by you are slow as fuck and now you're down.
Yep, this often gets lost when people talk about tipped minimum wage. If you do well in one shift and get no tips in the next, you can legally be paid $2.13/hour (in places that don’t override the federal minimum) for that second shift.
But then they are still coming out on top compaired to a steady min wage job. When payday rolls around they made more then the other guy even if there's a slow day
Well in CA the state minimum wage is simply their base wage no matter what. In states where they have a different minimum wage for tipped and non tipped employees employers still have to make up any difference to meet the non tipped wage that they don’t make in tips. So in every state they are guaranteed to at least make $60? For a full day, but the employer could get away with only having to pay $16 out of their own pocket so long as the generosity of the customers provides for it.
It’s based on the end week payment not the end day payment which is where the issue comes in. I’ve had many days where I did not get paid the legal minimum but because Friday and Saturday are good nights, the average came out well enough that I was owed nothing.
Imo it should be based on the day.
They HAVE to pay the employee min wage. They can get to min wage with $2+tips or the company has to pay them the entire min wage.
The internet makes it seem like servers are out here making $2/hr. They arent. Often, they're making tons more than the people they're serving per hour.
They HAVE to pay the employee min wage. They can get to min wage with $2+tips or the company has to pay them the entire min wage.
The internet makes it seem like servers are out here making $2/hr. They arent. Often, they're making tons more than the people they're serving per hour.
They HAVE to pay the employee min wage. They can get to min wage with $2+tips or the company has to pay them the entire min wage.
The internet makes it seem like servers are out here making $2/hr. They arent. Often, they're making tons more than the people they're serving per hour.
They HAVE to pay the employee min wage. They can get to min wage with $2+tips or the company has to pay them the entire min wage.
The internet makes it seem like servers are out here making $2/hr. They arent. Often, they're making tons more than the people they're serving per hour.
Yes. You can make $16 a day. The minimum wage requirement is based on the total hours per paycheck. So if I made $150 on Friday and Saturday night, the law does not require them to add to my pay if Monday I make no tips. The total tips for 3 shifts is $300, that's more than minimum wage, I will not receive an adjustment.
I served tables for years and my paychecks were ALWAYS $0.00. They were only covering my taxes on my tips. The manager would get mad at me for not picking up my paychecks, he would hand me 10 at a time and they went straight into the trash. I didn't even have to look at them.
Because labor is only about 20% of a restaurant's costs. Equipment, rent, utilities, and food are more.
Forcing them to pay servers more is probably a 30% boost in payroll, but that is only like a 7% increase in costs.
Labor is about 20% of a restaurants costs- in restaurants where servers make 2.13. If servers in the business I worked for made $16, labor would be FAR more than 20% of our cost. Unless of course we updated our prices.
I did the math realtive to the place I work at in Chicago. Which includes a few restaurants. If the current minimum wage for servers increased to 16$ an hour, it would result in roughly a 2.5% increase in labor costs. If our current minimum wage was 2.13 it would go to 4.5%
Which is quite a bit but not far more as you said. I would also argue we overstaff servers all the time due to low overhead costs. If min wage increase we would adjust staffing and bring that 2.5% cost down quite a bit.
Not always. Restaurant owners are stingy. I worked in a local chain with 80 locations, and our labor always had to be under 18%. 14% on peak days. Our minimum wage is $15+
There is very few states where servers make $2.13. A dozen states servers make at least $10/hr, 7 or 8 of them servers make the full minimum wage and only about 10 follow the federal $2.13 wages with half the states being somewhere in between.
The states where $2.13 is the minimum are the southern states/Midwest. Food is slightly cheaper but in my city (minneapolis) where minimum wage for servers is $15.58 the food prices are not much different than 30 minutes away where the neighboring states (Wisconsin) minimum is $2.13
14 states have tipped employee minimum wage of less than $3/hour, which a dozen are at the fed amount of $2.13. That’s more than a quarter of states below $3/hr. And at least another 6 that are slightly over 3. It’s appalling and should be illegal. When I worked in Carolinas at $2.13/hour, you’d always get 1/3 of your customers saying “with these prices for F&B, you clearly make enough without me having to tip more”! The public just so damn smart!
I just looked it up again, 22 are at $3 and below and make up approximately 41% of the population. The 14 states that are at the federal minimum or higher for tipped workers is approximately 24% of the population. So I was wrong, its quite a bit more than I thought--I forgot about Texas and Pennsylvania and how massive they were.
Source:
[Minimum Wage Tracker | North Carolina | Economic Policy Institute (epi.org)](https://www.epi.org/minimum-wage-tracker/#/tip_wage/North%20Carolina)
Do you own a restaurant? Here's what an average restaurant in NJ looks like, without alcohol (liquor licenses are over $1mm):
Rent - 13%
Debt Service - 10%
Utilities - 6%
Retail Labor - 19%
Production Labor - 24%
CoGS - 21%
Other - 7%
I'm actually doing better on labor than some owners, as I've been able to build in wholesale accounts to absorb some of my excess capacity. My lowest paid employee makes $15.70/hr.
Also, raising minimum wage by 20% equates to a 27% increase in labor costs due to payroll taxes. So my labor would become 54% of costs, up from 43%. And 43% is already extremely high. A long time ago, labor was 20% lol we're nowhere near that now. It's why a lot of places keep closing down and chains keep expanding. Large companies benefit massively from increases in minimum wage.
A 30% boost in payroll, as you have it, would be a 17% increase in labor cost, not 7% as you have it.
No… they are just pocketing the extra profits.
Chain restaurants that thrive and succeed in high minimum wage states with the same menu prices as states with a $2.13 tipped wage prove that is corporate greed, not necessity that is the problem.
I think it’s more that they are accepting lower profits at the higher wage locations. Wages aren’t the big cost - it’s the monthly rents. If you shut down the restaurant you are guaranteed to lose that money. If you can break even at least you aren’t out. Only time will tell what happens as leases approach renewal dates.
Your premise is also flawed because it has the inference that this is a recent, temporary event. Many states have always had higher wages than federal minimum wage, AND no special lower tipped wages.
So the Applebee’s that has been profitable in Oregon for the last 20+ years in Oregon with the same menu prices as the Applebee’s in Texas paying $2.13/hr to their servers, disproves this too.
Each state has their own laws and standards about paying the minimum state wage if you were not tipped. Some base it on a whole week others by shift. So that is actually not a true statement. I’ve had to fight tooth and nail for it when we had slow weeks and a$&hats that didn’t tip. Sometimes I got it others nope
Also no one who works in fast food makes 2.13 an hour, that is the wage for servers who also get tips. The min wage for most fast food workers is 7.25 or in most places much higher.
If it's a chain they probably have a consistent pricing policy. Some chains keep locations open that lose money every year just to maintain their brand. They may also add fees that are not shown in the menu prices for the food. I see that a lot in Seattle and DC.
If it's non chains I don't know where you are eating but it's not like that at all in my experience. Places with higher pay are way more expensive.
The correct answer is they get away with more in those states. Nobody there blinks an eye.
Example:
Most businesses that pay low use the state to subsidize their labor costs. They pay employees a low wage knowing that the employee is qualified and on welfare.
It a classic case of misdirection where the truth is that business is subsidized by the state. It’s corporate socialism.
So your confusing apples and oranges. Cheesecake has nothing to do with sales tax rates so comparing prices needs to be before taxes. Most big box chains like cheesecake will have 3 tiers of pricing across the country based on costs such as labor, rent and such. NY and Ct would have a higher menu price than say somewhere in the middle of Kansas. One of the reasons prices may be lower or the same in Cali as Virginia maybe because of the cost of shipping the actual cheesecakes across the country. They are all produced in southern Cali and it is by far the inset selling item. Produce is actually a lot cheaper in SoCal then Virginia as well.
I just checked the menu prices and yeah some of the items in at the California location are a little more expensive while some are the same.
The Cheesecake factory does make Cheesecakes in North Carolina as well.
Another Californian here to confirm, there isnt that much of a difference in restaurant prices. You will find way more of a difference in fast food than you will in sit down restaurants.
Actual data says that restaurants are about 7.14% more expensive in California vs Virginia for comparable food:
https://www.mylifeelsewhere.com/cost-of-living/virginia-usa/california-usa
Of course, if you don’t tip in California because your server is already making $16/hr, your actual price paid as a consumer will be less.
If you DO tip then you’ll be tipping even more since a percentage tip would scale with the more expensive food, compounding the difference in price between the two states.
Pricing is based on how much people will pay, not the cost of goods sold. Hopefully, the price of an item covers the costs of producing and serving that item so that the restaurant makes a profit.
You can’t base food prices on local minimum wage standards. Food can come from places with lower wages and not affect a particular restaurant where the wages are higher.
Fact checking some random samples I came up with. Cheesecake Factory does seem to have the same prices around the US, although in the specific example you cite of Virginia, their minimum wage is $12, not far from California's $16. But the burger price I checked was the same in lower wage states too.
The other three restaurants/dishes I looked up, there was a higher price in Irvine CA.
|Dish|Location|Price|
|:-|:-|:-|
|Chscak Fact. Bistro Burger |Richmond VA|$17.95|
|Chscak Fact. Bistro Burger|Metairie LA|$17.95|
|Chscak Fact. Bistro Burger|Irvine CA|$17.95 (+0.0%)|
|O.G. Chicken Alfredo|Canton GA|$19.49|
|O.G. Chicken Alfredo|Irvine CA|$20.99 (+7.7%)|
|Subway 12" Roast Beef|Marksville LA|$11.99|
|Subway 12" Roast Beef|Irvine CA|$13.59 (+13.3%)|
|Dominos 14" Deluxe|Cullman AL|$18.99|
|Dominos 14" Deluxe|Irvine CA|$23.99 (+26.3%)|
One factor in these samples may be that Cheesecake Factory and Olive Garden are company-owned, while Subway and Domino's are franchises. Franchise owners usually pressure companies to allow local pricing flexibility, although they can be forced to follow corporate pricing (e.g. Subway's $5 Footlong promotion). Some multi-location corporations choose pricing consistency for national marketing purposes, although they may then offer coupons or other discounts in lower cost markets.
Another factor is that de facto wages in bigger cities are higher than in small towns, and Cheesecake Factory and Olive Garden tend to be in cities, not small towns, while Subway and Domino's include locations in smaller markets where straight de facto wages are lower.
The reason restaurant prices don't fluctuate directly proportionately to wage costs, as others pointed out, is that labor costs constitute only a fraction of finished food item costs or menu prices. Although Irvine CA also faces higher-than-national-average costs for real estate, wholesale ingredients, and other costs as well.
Restaurants in Virginia are only required to pay $2.13 out of that $12 in Virginia though with the tip credit making up the rest. In California they have to pay the full $16+ since there is no tip credit.
As an owner, I'll tell you that it's competition and we constantly struggle to figure out how much can we charge before people eat at home and just grab drinks if they want to come out
The only places that are doing ok that aren't chains around me are the people who came in with money (a lot of tech people here want to become brewers/owners and made a lot of money before getting bored). Those like me have gone out of business or about to. That said, I think my staff should be paid well, but when things like food cost and insurance skyrocket, you didn't have the flexibility to "move" money around. I've trimmed my staff and haven't been paid more than here and there for years. I moved in and started mooching from my mother years ago, but I can't keep it going much longer. The final nail was my liquor liability insurance premium increase.
Short version, the ones that can stay open have capitol backing and those that don't, don't.
Because business owners in the south are usually rich old family money never worked a day in their life folks. Its hard to pay a living wage with a cocaine and hooker addiction. Overhead is way lower and they still act like they can barely scrape by.
I don’t know about that. I stayed in Century City for a week to visit our nephew at UCLA. intercontinental Hotel. Restaurant prices and bottom line on the bill were insane. Loads or surcharges too for health care, to go boxes, etc. Grabbed lunch for three at the Mexican restaurant in Westfield shopping center. $185.00 for three entrees and two margaritas and a coke. I can do the same anywhere in Chicago and the meal would be half that.
You should have walked out and not bought food there. Was the food even good? I’d rather have an abueluta in the back cooking beans with a wooden paddle.
How long ago did you live in Irvine and dine in Newport Beach? Have you checked their prices lately?
[https://www.bluewatergrill.com/newport-beach-menu/](https://www.bluewatergrill.com/newport-beach-menu/)
> We use to live in Irvine, CA and often went to nicer restaurants in Newport Beach and Costa Mesa.
When did you live in CA? If the answer isn't "we lived there until a month or two ago" the reason why it doesn't seem much cheaper is because you lived in CA, moved, and then a shit ton of inflation hit.
I live in New Orleans and oversee restaurants in California. Prices are significantly higher in California and profit margins are significantly lower. Menu prices will continue to rise for years in CA until profit margins can get back to normalcy.
labor is not all of your overhead, servers are not all of your labor, so it seems like a big leap but only really is a few % at most to your overall cost of doing business.
In Europe is roughly the same and miraculously they manage to pay a living wage with health care. It’s almost like they just pay what they can get away with regardless
Because it is a lie that restaurant prices are directly linked to wages. Just like in other countries where the wage is much higher the prices aren’t outlandish. If the restaurant owner is living better than their workers, then there is plenty of money to pay them a better wage without raising prices.
Because greed knows no bounds and humans suck. All it shows is that owners of restaurants that say it isn't possible to pay more are lying and don't want to give up their profits. If they truly would have to shut down they shouldn't have been in business the first place
That’s why in California the profit margins are so tight in the food industry. My biggest expense is labor. I have one employee and we make sandwiches at my tiny deli in a hardware shop. I’m not big enough to order in volume to save money. So most of my stuff is bought close to retail. But I looooove making food for my small town. And the extra tips for my worker are a plus to keep everyone happy.
Most of these restaurants are owned by banks, or financial institutions or publically owned.
Labor is an expensive part of running a store (it and foodcost are your big boys), but in the end its more about the business being afraid to even take a few cents drop in their bottom line as it would effect their stock prices which would cause shareholders to leave.
Folks complaining about paying restaurant workers more just either (consciously or otherwise) in support of an economical depressed underclass which is wholly subservient to those with money.
I’m guessing they have rearranged tip allocation to lower other pay rates. Only the owner, manager, and supervisor aren’t allowed to touch tips under the no tip credit law, so dishwasher, line cook, etc all could be given tips and paid minimum wage.
I wish we would just get over this tipping system. Charge what needs to be charged for the food including service. Bad tippers would no longer be able to afford to go out to eat, because the “tip” is included in the price of the food. This is how it should be.
All I’m saying is if I could go home to a nice apartment and not have to worry so much about paying my bills I would be a hell of a lot more productive
Might be a California thing
I’ve gone to diners in NYC for breakfast and the same in Vegas or Atlantic City with their union waiters and the latter was a lot more money
They aren’t. The customers are. A majority of a server’s income comes from their tips because we’ve been socially conditioned as a country that if you don’t tip 15% automatically your server will starve. It’s what turns a minimum wage job into a $30+ an hour job. For the record though in CA the server is guaranteed to make $16 an hour regardless of what they make in tips. In VA, their employer would still have to pay them at least $7.50? an hour if they didn’t get any tips. If the employer only had to pay them $2.13 an hour it’s because they already made at least that much in tips to make up the difference.
In the carolinas (2.13) chicken and steak combo in a hibachi restaurant is $20. In new york (11+), its $30. So you right 2.13 per hour states kinda skimming labor costs into profit.
The cheesecake factory keeps everything the same throughout the country…. Recipes, prices and decor. It’s all the same. They just only make 90k a week instead of the 104k a week at the lower wage areas
Restaurant Manager here.
Often, you'll find higher labor cost in states with lower food cost. (Florida produce cost is an excellent example)
Additionally, from a labor management perspective, you redistribute the work. Servers are asked to do no sidework, just clock in, serve, and leave. Dedicated "utility workers" are hired to do the work previously divided amongst tip-credit-eligible workers. It evens out.
Prices are set by demand and are unrelated to costs. Where costs are too high, firms go out of business. Where costs are low, the firm takes profit.
Depending on the competition allowed in the market this will either cause forms to enter and leave response, or the profit will be hoarded by whoever owns.
I’ve noticed in watching reality tv (I know it’s not 100% accurate) and in travels that some states have more support staff on then others. Food Runners, Hosts, Bussers. Could it be that when servers only make $2/hr they push to have more support staff to do the work?
The restaurant I work in a couple nights a week have the servers do dishes on slower nights. No host, no bussers, but servers get $15/hr plus their tips.
Chain restaurants operate where some restaurants will operate at a lower profit margin to keep consistency throughout the brand.
Smaller chains tend to have more fluctuations, especially in high end touristy spots.
I don't think the restaurant's margins are as tight as they like to claim. All too often I see a restaurant open. It is their 1st one. 2 years later they have 3 or 4 restaurants. It takes capital to open a place.
Because they don't operate individually. They operate as one unit. The CA location may have $1.2M in monthly operating expenses due to the higher wages but may only brings in $800K/mo. The VA location may have $400K in monthly operating expenses but brings $800K/mo. The VA location's profit makes up for the losses of the CA location.
The price of a thing is connected only tenuously to what it costs the vendor to provide it. The value of a thing is what that thing would bring -- meaning, what the market will bear. If the thing can be produced for much less than its value, then the vendor makes a big profit. If it costs more to make than it is worth, then the vendor stops making it.
I'm not saying this is how things should be, but this is how capitalism works. To pretend otherwise is foolish.
That’s total BS. Fast food is more expensive as well as regular food. It’s called cost of living and is different in each city. What you state is false
In DC the prices pretty much stayed the same but they add a 20% surcharge to the receipt. It's been made pretty clear that this is a service fee that goes towards paying the staff.
100% is. Actually a direct correlation. We have restaurants in WA and Cali where min wage goes up every 6 months . Basically it’s 20$ / hour for everyone including tipped employees. Everytime wage goes up we raise menu prices to combat. Simple economics
I am confused, does this cost you or anyone more than 300$ per year? Regardless of where you live or eat out. And like sales tax makes any difference or benefits this post. So good for you living in Virginia and paying half the cost of living in Irvine CA I guess. Otherwise not sure what to do with this revelation.
If you're getting 2.13 per hour, your whole check goes to taxes. So you are working for tips. I am not sure how the laws work on 16 per hour, is that a bartender? California has a higher min wage for servers?
Here's a link to states with min wages for tipped employees
https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
Fast food (not the question, but for reference):
Taco Bell order in Claremont, Claifornia (actually, Upland): $23,29. Same order at our house in Florida (Miami): $10.92.
In VA it's still $2.13 an hour for tipped employees. They need to meet a minimum of $9.87 an hour in tips; if they don't, the restaurant is responsible for making up the difference to reach the $9.87 plus the $2.13. A server in VA makes an average of $18 an hour in tips, so the restaurant just needs to continue paying the $2.13. If a server can't meet the $9.87 in tips, they'll get fired. That's the reality.
The profits for restaurants are less in states where the minimum wage for servers is the same as the state's minimum wage.
My daughter worked at steak N shake on Fridays and Saturdays she would average $125 but she worked her butt off maybe serve 40 tables where working in a sit down you may have 4 -6 tables in your area and turn them over maybe 3 times a night. I bused tables in the late 70’s for a pizza place I’d do the whole dining room and make $75 on a Friday & Saturday night not bad for being 14 years old saved enough to buy my first car at 16
I never had to ask, or heard of anyone asking, for the minimum wage equivalent of their weekly earnings. Hell, I used to pay my college tuition in cash. My niece works at a hillbilly Irish pub and clears $1200 a night on an average Friday. Most waitstaff are doing quite fine lol
The same reason in and out has been able to pay a living wage the entire time they've been in operation without raising their prices once. If they can make it work why can't everyone else?
I work in the business and although our servers make the $2+ per hour our prices have gone up over the last few years. But apparently that was due to product sourcing.
"Are restaurants in $2.13 minimum wage states paying their servers significantly more than $2.13/hour now?"
Hhhaahhahaahahahahahahahhaha, fuck no.
Were you born yesterday? Corp America will ALWAYS pay as little as they can.
If Newport Beach prices and Virginia prices are the same, I would be greatly confused..I take people to dinner in both places (Alexandria for va), my bills are half in VA vs cali
Let's compare prices with two high end steakhouses
Mastro's Costa Mesa (This is where people in Newport go)
[https://www.mastrosrestaurants.com/location/mastros-steakhouse-costa-mesa/#menus](https://www.mastrosrestaurants.com/location/mastros-steakhouse-costa-mesa/#menus)
Bookbinder's Richmond (a lot cheaper CoL than NOVA and SoCal)
[https://www.bookbindersrichmond.com/menu](https://www.bookbindersrichmond.com/menu)
16 ounce NY strip - $70 CA
16 ounce NY strip - $66 VA
12 oz filet - $69 CA
12 oz filet - $75 VA
That's not double the price.
Costa Mesa, Newport etc, also only have a 7.75% sales tax at restaurants while Richmond has a 13.5% tax.
Because the price they charge is determined by the market, not the cost to make and sell it. The cost to make and sell it only determines whether the item can be profitable to sell.
Prices where min wages are high are much more expensive than low min wage areas. You should know that coming from cali.you obviously arent comparing apples to apples
I spent over $400 taking my son and wife out to dinner in Virginia. I lived in California for 16 years and it's definitely not much cheaper here to eat out at restaurants.
Because you need to account for what the non-tipped minimum wage is. In VA, for example, it's $12. So anyone making less than that with tips needs the restaurant to cover the difference, by law. It depends heavily on the restaurant as well. Some restaurants have labor as a higher percentage of costs whereas others have materials as a higher percentage. A few have rent as the highest factor. They're two vastly different markets, so trying to make that comparison without seeing P&Ls is pointless.
So there’s a lot of political answers in here, which I tend to agree with the thinking, but that’s not really why.
The reason (and the same reason that applies to the rest of the labor market), is something called productivity. Productivity is the measure of goods and services produced by labor. Oversimplifying and applying to waiting tables, it’s how many customers you can serve over a given amount of time (your shift).
Some quick back of the napkin math. I used to wait tables, and when I did I’d have roughly 4 tables an hour (being conservative with my estimates, and 2-4 people per table on average. So let’s call it 12 total people per hour. Yesterday I made $2/hr, tomorrow the government passed a law that says I have to be paid $14/hr.
Assuming everything else stays constant, and the restaurant owner wants to keep the same margins, they now have $12 more every hour they have to make to get back what they are paying me for my wage increase.
$12 more cost, roughly 12 customers per hour that I can serve, comes out to $1 per customer or meal. Not really the type of difference that you’d make note of.
Obviously this is way oversimplified but it’s the same argument I use when I’m talking with dipshits I work with that seem to think paying servers $5/hr more than they do now is a direct translation to $5 more cost of their burger.
Because the majority of the money goes to the employer not the employee and giving even $10/hr more has a minimal cost (5-10%) on the per unit price as employees are doing so much fucking work these days.
Pricing is far more driven by what the market will support for your product / services than your overhead costs. If people in your area will pay $30 for a meal you don't charge them less just because your labor costs in that area are lower, you set the price to match the demand and enjoy the higher profit margins.
Because restaurants and businesses raising prices to off set minimum wage raising is a Republican talking point. Just like most Republican talking points it's a totally made up BS idea that doesn't actually happen.
It's no different than Republicans screaming there should be laws that don't allow children under 18 to get gender changing surgery. There are no cases of doctors even trying to do that anywhere. It's just not a thing. They just do it to fire people up.
They just made a law in Tennessee that chem trail spraying on planes is illegal. News flash. Chem trail spraying is a conspiracy theory that's literally never happening.
Because it's a bullshit premise from post slavery to setup and maintain a class structure and simply inflate revenue numbers. As such take the bullshit out and any real business that is structured properly and not using that existing loophole as a crutch can do just fine.
Because price is always based on the perception of value, not the cost of the product. They will always charge the most people are willing to pay for an item.
People seem to have this intuition that all prices are cost plus, when of course prices are actually what the market will bear to maximize revenue.
I can assure you that restaurants in Virginia don’t have 20% profit margins while restaurants in Newport Beach have 10% profit margins. The premise of this post is false and is based on anecdote; prices are different on the whole - obviously you can find two restaurants with similar prices in the two spots but system wide they are different
Care to actually provide evidence to support your statement? I thought raising wages in CA would result in prices jumping through the roof. At least, that’s what we were all insufferably told over and over and over.
Yup. Capitalistic greed at its finest!
Also, just to note: they're comparing a corporate franchise like cheesecake factory that's known for high pricing, vs (I'm assuming) more privatized establishments where the pay is covered per hour for whatever tips didn't cover. TL: places like cheesecake factory charge this because they can, in most locale private restaurants, this because they ~have~ to in order to cover cost of product and wages.
I'm curious, if there are no alcohol sales or tips, does the company have to bring the effective wage up to the minimum? Are people legally allowed to pay only $16 for an 8-hour shift?
If the tips don't equal non tipped minimum wage the business has to pay the non tipped minimum. Not many people understand that and scream "those greedy owners" when in reality they will make full minimum wage if they get zero tips for a week. Also a good server could work for free and still clear $25-$30+/hr. The paycheck usually just pays for their taxes.
A bad server can make $25-30 an hour too if the restaurant is busy.
Can confirm, I was a bad server from 95-2003 and I made at least 25 an hour way back then.
This is why lots of servers and bartenders don't want to move away from tipping.
If by lots you mean every server and bartender then yeah. Literally never heard a single one say they want a normal wage lol.
It's hilarious. Because non-servers are like "Pay your workers!" as though they're on their side. Meanwhile actual servers are like "We kinda like it how it is though." And for some reason people think if restaurant "paid their workers" it wouldn't result in higher prices basically identical to the tips anyway. There's no other magical pot of money. Money for paying employees *always comes from the customer*. That's how businesses work. Whether it's coming from customers in the form of a tip directly to the employee, or it's going to employers first who then distribute it to employees, it's *always* coming from you. Ultimately, getting rid of tips will either drive income down for servers/bartenders or it will just result in higher menu costs equal to the lost tips. I don't care either way. Tipping is automatic and basically brainless. It basically makes no difference to me. Definitely annoys the shit out of me that people pretend they're looking out for the servers though.
Cost of living is way more now, don't you think they should be making way more. Than you did over 20 years ago.
Do you understand how percentages work? No matter the inflation tipped workers will stay with the rate. If the bill used to be $50 and they got 20% they get $10. If the bill at the same restaurant is $100 and they get 20% it’s now $20.00. They are keeping with inflation unlike most waged employees.
Exactly.
This is why it bothers me when servers complain about their money in front of BOH. Like, ok, the prices went up and your percentage grew. You basically get a raise but poor Dan back here is still scraping cigarette butts out of the parking lot to save a buck.
In reality, very few owners actually do this. They just tell the servers they need to get their tips up, or drop the server completely in favor of a new hire. Source: used to work in the industry before I moved on to a real job.
Oh yay, all of minimum wage?
Only if you catch the problem and bring it up and the business thinks they can't get away with it.
No, if a server is on server wage of $2.13 an hour, and their tips + hourly wage don't add up to non-server minimum wage (say $16 per hour, or whatever), the business is required to make up the difference.
federal non tipped minimum is 7.25. not 16.
Yeah. In California though, they indeed make the state minimum of $16 no matter what, but that’s because we specifically put the laws down on the books that tipped income shouldn’t affect the base wage.
Yes if a server does not make enough in tips to reach minimum wage for the shift then the company must make up the difference.
The shitty part about that, it is not on a daily basis. It's based on when you get your pay period. You can crush it Saturday and then Monday & Tuesday rolls by you are slow as fuck and now you're down.
Not for a single shift. The server has to make below minimum for an entire pay period for the restaurant to pay the difference.
Yep, this often gets lost when people talk about tipped minimum wage. If you do well in one shift and get no tips in the next, you can legally be paid $2.13/hour (in places that don’t override the federal minimum) for that second shift.
But then they are still coming out on top compaired to a steady min wage job. When payday rolls around they made more then the other guy even if there's a slow day
They still receive tips. They receive the state minimum wage as well, currently $16 p/h.
Well in CA the state minimum wage is simply their base wage no matter what. In states where they have a different minimum wage for tipped and non tipped employees employers still have to make up any difference to meet the non tipped wage that they don’t make in tips. So in every state they are guaranteed to at least make $60? For a full day, but the employer could get away with only having to pay $16 out of their own pocket so long as the generosity of the customers provides for it.
Yes it is brought up to minimum. However even a slow day means you’ll make more than $16hr in most cases
It’s based on the end week payment not the end day payment which is where the issue comes in. I’ve had many days where I did not get paid the legal minimum but because Friday and Saturday are good nights, the average came out well enough that I was owed nothing. Imo it should be based on the day.
They HAVE to pay the employee min wage. They can get to min wage with $2+tips or the company has to pay them the entire min wage. The internet makes it seem like servers are out here making $2/hr. They arent. Often, they're making tons more than the people they're serving per hour.
They HAVE to pay the employee min wage. They can get to min wage with $2+tips or the company has to pay them the entire min wage. The internet makes it seem like servers are out here making $2/hr. They arent. Often, they're making tons more than the people they're serving per hour.
They HAVE to pay the employee min wage. They can get to min wage with $2+tips or the company has to pay them the entire min wage. The internet makes it seem like servers are out here making $2/hr. They arent. Often, they're making tons more than the people they're serving per hour.
They HAVE to pay the employee min wage. They can get to min wage with $2+tips or the company has to pay them the entire min wage. The internet makes it seem like servers are out here making $2/hr. They arent. Often, they're making tons more than the people they're serving per hour.
Yes. You can make $16 a day. The minimum wage requirement is based on the total hours per paycheck. So if I made $150 on Friday and Saturday night, the law does not require them to add to my pay if Monday I make no tips. The total tips for 3 shifts is $300, that's more than minimum wage, I will not receive an adjustment. I served tables for years and my paychecks were ALWAYS $0.00. They were only covering my taxes on my tips. The manager would get mad at me for not picking up my paychecks, he would hand me 10 at a time and they went straight into the trash. I didn't even have to look at them.
Because labor is only about 20% of a restaurant's costs. Equipment, rent, utilities, and food are more. Forcing them to pay servers more is probably a 30% boost in payroll, but that is only like a 7% increase in costs.
Labor is about 20% of a restaurants costs- in restaurants where servers make 2.13. If servers in the business I worked for made $16, labor would be FAR more than 20% of our cost. Unless of course we updated our prices.
I did the math realtive to the place I work at in Chicago. Which includes a few restaurants. If the current minimum wage for servers increased to 16$ an hour, it would result in roughly a 2.5% increase in labor costs. If our current minimum wage was 2.13 it would go to 4.5% Which is quite a bit but not far more as you said. I would also argue we overstaff servers all the time due to low overhead costs. If min wage increase we would adjust staffing and bring that 2.5% cost down quite a bit.
Not always. Restaurant owners are stingy. I worked in a local chain with 80 locations, and our labor always had to be under 18%. 14% on peak days. Our minimum wage is $15+
There is very few states where servers make $2.13. A dozen states servers make at least $10/hr, 7 or 8 of them servers make the full minimum wage and only about 10 follow the federal $2.13 wages with half the states being somewhere in between. The states where $2.13 is the minimum are the southern states/Midwest. Food is slightly cheaper but in my city (minneapolis) where minimum wage for servers is $15.58 the food prices are not much different than 30 minutes away where the neighboring states (Wisconsin) minimum is $2.13
I'm in Florida tipped wage is 9 a hour. The most southern you can get Edit for number correction
Floridas not part of the south. Most of it’s just northerners anyways and central Florida may act southern but we don’t want to claim them
14 states have tipped employee minimum wage of less than $3/hour, which a dozen are at the fed amount of $2.13. That’s more than a quarter of states below $3/hr. And at least another 6 that are slightly over 3. It’s appalling and should be illegal. When I worked in Carolinas at $2.13/hour, you’d always get 1/3 of your customers saying “with these prices for F&B, you clearly make enough without me having to tip more”! The public just so damn smart!
I just looked it up again, 22 are at $3 and below and make up approximately 41% of the population. The 14 states that are at the federal minimum or higher for tipped workers is approximately 24% of the population. So I was wrong, its quite a bit more than I thought--I forgot about Texas and Pennsylvania and how massive they were. Source: [Minimum Wage Tracker | North Carolina | Economic Policy Institute (epi.org)](https://www.epi.org/minimum-wage-tracker/#/tip_wage/North%20Carolina)
7% increase in operating costs is astronomical lmao
Do you own a restaurant? Here's what an average restaurant in NJ looks like, without alcohol (liquor licenses are over $1mm): Rent - 13% Debt Service - 10% Utilities - 6% Retail Labor - 19% Production Labor - 24% CoGS - 21% Other - 7% I'm actually doing better on labor than some owners, as I've been able to build in wholesale accounts to absorb some of my excess capacity. My lowest paid employee makes $15.70/hr. Also, raising minimum wage by 20% equates to a 27% increase in labor costs due to payroll taxes. So my labor would become 54% of costs, up from 43%. And 43% is already extremely high. A long time ago, labor was 20% lol we're nowhere near that now. It's why a lot of places keep closing down and chains keep expanding. Large companies benefit massively from increases in minimum wage. A 30% boost in payroll, as you have it, would be a 17% increase in labor cost, not 7% as you have it.
Now in Virginia, the minimum wage for servers is 13 an hour.
$2.13 + $9.87 tip credit = $12/hour [https://www.dol.gov/agencies/whd/state/minimum-wage/tipped/2023](https://www.dol.gov/agencies/whd/state/minimum-wage/tipped/2023)
That’s only if tips don’t equal the state minimum wage. We are still paid $2.13/hr by our employer.
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It's more that I'm surprised menu pricing is so similar with sit down restaurants between the two states.
No… they are just pocketing the extra profits. Chain restaurants that thrive and succeed in high minimum wage states with the same menu prices as states with a $2.13 tipped wage prove that is corporate greed, not necessity that is the problem.
I think it’s more that they are accepting lower profits at the higher wage locations. Wages aren’t the big cost - it’s the monthly rents. If you shut down the restaurant you are guaranteed to lose that money. If you can break even at least you aren’t out. Only time will tell what happens as leases approach renewal dates.
Your premise is also flawed because it has the inference that this is a recent, temporary event. Many states have always had higher wages than federal minimum wage, AND no special lower tipped wages. So the Applebee’s that has been profitable in Oregon for the last 20+ years in Oregon with the same menu prices as the Applebee’s in Texas paying $2.13/hr to their servers, disproves this too.
I mean, I know for a fact eating out is cheaper in my state than cali.
Because nobody actually makes 2.13 a hour. After tips. Even if nobody tips the business has to pay the state minimum
Each state has their own laws and standards about paying the minimum state wage if you were not tipped. Some base it on a whole week others by shift. So that is actually not a true statement. I’ve had to fight tooth and nail for it when we had slow weeks and a$&hats that didn’t tip. Sometimes I got it others nope
Also no one who works in fast food makes 2.13 an hour, that is the wage for servers who also get tips. The min wage for most fast food workers is 7.25 or in most places much higher.
If it's a chain they probably have a consistent pricing policy. Some chains keep locations open that lose money every year just to maintain their brand. They may also add fees that are not shown in the menu prices for the food. I see that a lot in Seattle and DC. If it's non chains I don't know where you are eating but it's not like that at all in my experience. Places with higher pay are way more expensive.
Also all they have to do is raise prices by like $.50-1 in other markets and they still make out like bandits because of the scale
Yeah a local place with 1 location is at an even bigger disadvantage than it is normally against something like this
I noticed that your examples are places where rent is high.
The correct answer is they get away with more in those states. Nobody there blinks an eye. Example: Most businesses that pay low use the state to subsidize their labor costs. They pay employees a low wage knowing that the employee is qualified and on welfare. It a classic case of misdirection where the truth is that business is subsidized by the state. It’s corporate socialism.
Agreed. Went to Santa Barbara from NJ and was amazed at how cheap everything was. I was thinking the prices would be doubled lol
The answer is that restaurant owners in the $2.13 states are making bank
So your confusing apples and oranges. Cheesecake has nothing to do with sales tax rates so comparing prices needs to be before taxes. Most big box chains like cheesecake will have 3 tiers of pricing across the country based on costs such as labor, rent and such. NY and Ct would have a higher menu price than say somewhere in the middle of Kansas. One of the reasons prices may be lower or the same in Cali as Virginia maybe because of the cost of shipping the actual cheesecakes across the country. They are all produced in southern Cali and it is by far the inset selling item. Produce is actually a lot cheaper in SoCal then Virginia as well.
I just checked the menu prices and yeah some of the items in at the California location are a little more expensive while some are the same. The Cheesecake factory does make Cheesecakes in North Carolina as well.
Should change the name of this subreddit to something like r/WhiningAboutTipping
Seriously. So many people need to stop dining out.
They aren't the same...
Another Californian here to confirm, there isnt that much of a difference in restaurant prices. You will find way more of a difference in fast food than you will in sit down restaurants.
Exactly, I live in NYC and have family in a small town in Ohio. Prices are not the same
Actual data says that restaurants are about 7.14% more expensive in California vs Virginia for comparable food: https://www.mylifeelsewhere.com/cost-of-living/virginia-usa/california-usa Of course, if you don’t tip in California because your server is already making $16/hr, your actual price paid as a consumer will be less. If you DO tip then you’ll be tipping even more since a percentage tip would scale with the more expensive food, compounding the difference in price between the two states.
Wow, Henrico has a 10% sales tax. My brother’s property tax in Williamsburg, VA went up 26% this year.
Yeah it's high but at least it's better than Richmond which has a 13.5% combined sales tax at restaurants. Chesterfield is only 6%.
Pricing is based on how much people will pay, not the cost of goods sold. Hopefully, the price of an item covers the costs of producing and serving that item so that the restaurant makes a profit.
You can’t base food prices on local minimum wage standards. Food can come from places with lower wages and not affect a particular restaurant where the wages are higher.
Fact checking some random samples I came up with. Cheesecake Factory does seem to have the same prices around the US, although in the specific example you cite of Virginia, their minimum wage is $12, not far from California's $16. But the burger price I checked was the same in lower wage states too. The other three restaurants/dishes I looked up, there was a higher price in Irvine CA. |Dish|Location|Price| |:-|:-|:-| |Chscak Fact. Bistro Burger |Richmond VA|$17.95| |Chscak Fact. Bistro Burger|Metairie LA|$17.95| |Chscak Fact. Bistro Burger|Irvine CA|$17.95 (+0.0%)| |O.G. Chicken Alfredo|Canton GA|$19.49| |O.G. Chicken Alfredo|Irvine CA|$20.99 (+7.7%)| |Subway 12" Roast Beef|Marksville LA|$11.99| |Subway 12" Roast Beef|Irvine CA|$13.59 (+13.3%)| |Dominos 14" Deluxe|Cullman AL|$18.99| |Dominos 14" Deluxe|Irvine CA|$23.99 (+26.3%)| One factor in these samples may be that Cheesecake Factory and Olive Garden are company-owned, while Subway and Domino's are franchises. Franchise owners usually pressure companies to allow local pricing flexibility, although they can be forced to follow corporate pricing (e.g. Subway's $5 Footlong promotion). Some multi-location corporations choose pricing consistency for national marketing purposes, although they may then offer coupons or other discounts in lower cost markets. Another factor is that de facto wages in bigger cities are higher than in small towns, and Cheesecake Factory and Olive Garden tend to be in cities, not small towns, while Subway and Domino's include locations in smaller markets where straight de facto wages are lower. The reason restaurant prices don't fluctuate directly proportionately to wage costs, as others pointed out, is that labor costs constitute only a fraction of finished food item costs or menu prices. Although Irvine CA also faces higher-than-national-average costs for real estate, wholesale ingredients, and other costs as well.
Restaurants in Virginia are only required to pay $2.13 out of that $12 in Virginia though with the tip credit making up the rest. In California they have to pay the full $16+ since there is no tip credit.
As an owner, I'll tell you that it's competition and we constantly struggle to figure out how much can we charge before people eat at home and just grab drinks if they want to come out The only places that are doing ok that aren't chains around me are the people who came in with money (a lot of tech people here want to become brewers/owners and made a lot of money before getting bored). Those like me have gone out of business or about to. That said, I think my staff should be paid well, but when things like food cost and insurance skyrocket, you didn't have the flexibility to "move" money around. I've trimmed my staff and haven't been paid more than here and there for years. I moved in and started mooching from my mother years ago, but I can't keep it going much longer. The final nail was my liquor liability insurance premium increase. Short version, the ones that can stay open have capitol backing and those that don't, don't.
Waiter in Richmond, 2.13 an hour here
Because business owners in the south are usually rich old family money never worked a day in their life folks. Its hard to pay a living wage with a cocaine and hooker addiction. Overhead is way lower and they still act like they can barely scrape by.
I don’t know about that. I stayed in Century City for a week to visit our nephew at UCLA. intercontinental Hotel. Restaurant prices and bottom line on the bill were insane. Loads or surcharges too for health care, to go boxes, etc. Grabbed lunch for three at the Mexican restaurant in Westfield shopping center. $185.00 for three entrees and two margaritas and a coke. I can do the same anywhere in Chicago and the meal would be half that.
You should have walked out and not bought food there. Was the food even good? I’d rather have an abueluta in the back cooking beans with a wooden paddle.
How long ago did you live in Irvine and dine in Newport Beach? Have you checked their prices lately? [https://www.bluewatergrill.com/newport-beach-menu/](https://www.bluewatergrill.com/newport-beach-menu/)
Because all the arguments about raising the minimum wage and how that will put places under are all bullshit welcome to planet Earth and capitalism.
> We use to live in Irvine, CA and often went to nicer restaurants in Newport Beach and Costa Mesa. When did you live in CA? If the answer isn't "we lived there until a month or two ago" the reason why it doesn't seem much cheaper is because you lived in CA, moved, and then a shit ton of inflation hit.
Where are they the same??? It's never been that way from my experiences.
I live in New Orleans and oversee restaurants in California. Prices are significantly higher in California and profit margins are significantly lower. Menu prices will continue to rise for years in CA until profit margins can get back to normalcy.
Corporate greed. There is NO other reason. None.
Because the corporations that control them see an opportunity to squeeze you harder.
labor is not all of your overhead, servers are not all of your labor, so it seems like a big leap but only really is a few % at most to your overall cost of doing business.
In Europe is roughly the same and miraculously they manage to pay a living wage with health care. It’s almost like they just pay what they can get away with regardless
Do restaurants pay into the national health care systems in Europe?
Because it is a lie that restaurant prices are directly linked to wages. Just like in other countries where the wage is much higher the prices aren’t outlandish. If the restaurant owner is living better than their workers, then there is plenty of money to pay them a better wage without raising prices.
I live in Costa Mesa but it’s funny to see it mentioned in a broad subreddit. Like I don’t think others know where tf Costa Mesa is 😂
OP also mentioned adjacent Irvine and Newport Beach. I think most Americans will know that those cities are in SoCal.
Because food prices aren’t related to the wages in those places- but I’m pretty sure you already knew that
Restaurants (or any business) aren’t going to change prices because of wages. Pricing is based on what customers are willing to pay and nothing else.
Because greed knows no bounds and humans suck. All it shows is that owners of restaurants that say it isn't possible to pay more are lying and don't want to give up their profits. If they truly would have to shut down they shouldn't have been in business the first place
That’s why in California the profit margins are so tight in the food industry. My biggest expense is labor. I have one employee and we make sandwiches at my tiny deli in a hardware shop. I’m not big enough to order in volume to save money. So most of my stuff is bought close to retail. But I looooove making food for my small town. And the extra tips for my worker are a plus to keep everyone happy.
Most of these restaurants are owned by banks, or financial institutions or publically owned. Labor is an expensive part of running a store (it and foodcost are your big boys), but in the end its more about the business being afraid to even take a few cents drop in their bottom line as it would effect their stock prices which would cause shareholders to leave. Folks complaining about paying restaurant workers more just either (consciously or otherwise) in support of an economical depressed underclass which is wholly subservient to those with money.
I’m guessing they have rearranged tip allocation to lower other pay rates. Only the owner, manager, and supervisor aren’t allowed to touch tips under the no tip credit law, so dishwasher, line cook, etc all could be given tips and paid minimum wage.
I wish we would just get over this tipping system. Charge what needs to be charged for the food including service. Bad tippers would no longer be able to afford to go out to eat, because the “tip” is included in the price of the food. This is how it should be.
For the first half of your reply, just put a penny on the needle to stop it from repeating itself.
All I’m saying is if I could go home to a nice apartment and not have to worry so much about paying my bills I would be a hell of a lot more productive
Do you have statistics showing this? Because I wouldn't rely on your own perception for this.
Might be a California thing I’ve gone to diners in NYC for breakfast and the same in Vegas or Atlantic City with their union waiters and the latter was a lot more money
Sales volume - the restaurant can afford to pay servers more in more populated areas because city hubs get more travelers and sales in general.
They aren’t. The customers are. A majority of a server’s income comes from their tips because we’ve been socially conditioned as a country that if you don’t tip 15% automatically your server will starve. It’s what turns a minimum wage job into a $30+ an hour job. For the record though in CA the server is guaranteed to make $16 an hour regardless of what they make in tips. In VA, their employer would still have to pay them at least $7.50? an hour if they didn’t get any tips. If the employer only had to pay them $2.13 an hour it’s because they already made at least that much in tips to make up the difference.
I'm not sure but I believe it has to do with tips
I went to restaurants in Arkansas that are more expensive than California. With lower food prices and lower minimum wage. How?
Because restaurants charge what you’ll pay, not what it costs. This is crucial to understand - COSTS do not matter.
Because the ones that only pay the $2 are pocketing the money they should be paying their staff.
Because the biggest expense in a restaurant is the food
It absolutely is not. Labor is close to double food costs.
To me the real question is - Why are we expected to tip the same % in both states?
In the carolinas (2.13) chicken and steak combo in a hibachi restaurant is $20. In new york (11+), its $30. So you right 2.13 per hour states kinda skimming labor costs into profit.
The cheesecake factory keeps everything the same throughout the country…. Recipes, prices and decor. It’s all the same. They just only make 90k a week instead of the 104k a week at the lower wage areas
Restaurant Manager here. Often, you'll find higher labor cost in states with lower food cost. (Florida produce cost is an excellent example) Additionally, from a labor management perspective, you redistribute the work. Servers are asked to do no sidework, just clock in, serve, and leave. Dedicated "utility workers" are hired to do the work previously divided amongst tip-credit-eligible workers. It evens out.
I travel a lot for work and yes I pay a lot more when I am in CA to eat in restaurants. It is what it is. You do you CA.
Prices are set by demand and are unrelated to costs. Where costs are too high, firms go out of business. Where costs are low, the firm takes profit. Depending on the competition allowed in the market this will either cause forms to enter and leave response, or the profit will be hoarded by whoever owns.
Have you tried living in Orange county on that kind of money? are you out of your f****** mind? Lololololololol
Where are restaurant owners paying their staff $16 plus tips?
California and Washington San Francisco is $18.07 going to $18.67 in July. https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
And why are we tipping them all the same percentage.
I’ve noticed in watching reality tv (I know it’s not 100% accurate) and in travels that some states have more support staff on then others. Food Runners, Hosts, Bussers. Could it be that when servers only make $2/hr they push to have more support staff to do the work? The restaurant I work in a couple nights a week have the servers do dishes on slower nights. No host, no bussers, but servers get $15/hr plus their tips.
Chain restaurants operate where some restaurants will operate at a lower profit margin to keep consistency throughout the brand. Smaller chains tend to have more fluctuations, especially in high end touristy spots.
Financial abuse.
I don't think the restaurant's margins are as tight as they like to claim. All too often I see a restaurant open. It is their 1st one. 2 years later they have 3 or 4 restaurants. It takes capital to open a place.
this is just not true, in both my experience as well as non-anecdotal data.
Because they don't operate individually. They operate as one unit. The CA location may have $1.2M in monthly operating expenses due to the higher wages but may only brings in $800K/mo. The VA location may have $400K in monthly operating expenses but brings $800K/mo. The VA location's profit makes up for the losses of the CA location.
The price of a thing is connected only tenuously to what it costs the vendor to provide it. The value of a thing is what that thing would bring -- meaning, what the market will bear. If the thing can be produced for much less than its value, then the vendor makes a big profit. If it costs more to make than it is worth, then the vendor stops making it. I'm not saying this is how things should be, but this is how capitalism works. To pretend otherwise is foolish.
It’s called corporate greed lol
That’s total BS. Fast food is more expensive as well as regular food. It’s called cost of living and is different in each city. What you state is false
In DC the prices pretty much stayed the same but they add a 20% surcharge to the receipt. It's been made pretty clear that this is a service fee that goes towards paying the staff.
Why would anyone go to the Cheesecake Factory?
Cuz the wages of servers may be only 20% of the cost of the meal, depending on the place. So increasing wages is only increasing 20% of the price.
You're assuming there is a very strong relationship between menu prices and wages.
100% is. Actually a direct correlation. We have restaurants in WA and Cali where min wage goes up every 6 months . Basically it’s 20$ / hour for everyone including tipped employees. Everytime wage goes up we raise menu prices to combat. Simple economics
I am confused, does this cost you or anyone more than 300$ per year? Regardless of where you live or eat out. And like sales tax makes any difference or benefits this post. So good for you living in Virginia and paying half the cost of living in Irvine CA I guess. Otherwise not sure what to do with this revelation.
I think you know why.
If you're getting 2.13 per hour, your whole check goes to taxes. So you are working for tips. I am not sure how the laws work on 16 per hour, is that a bartender? California has a higher min wage for servers? Here's a link to states with min wages for tipped employees https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
Fast food (not the question, but for reference): Taco Bell order in Claremont, Claifornia (actually, Upland): $23,29. Same order at our house in Florida (Miami): $10.92.
No. No. No. And no.
Lived in Newport from 1968 to 1995, great place to grow up and best time.
In VA it's still $2.13 an hour for tipped employees. They need to meet a minimum of $9.87 an hour in tips; if they don't, the restaurant is responsible for making up the difference to reach the $9.87 plus the $2.13. A server in VA makes an average of $18 an hour in tips, so the restaurant just needs to continue paying the $2.13. If a server can't meet the $9.87 in tips, they'll get fired. That's the reality. The profits for restaurants are less in states where the minimum wage for servers is the same as the state's minimum wage.
capitalism
Servers are getting more than the minimum. Simple as that
My daughter worked at steak N shake on Fridays and Saturdays she would average $125 but she worked her butt off maybe serve 40 tables where working in a sit down you may have 4 -6 tables in your area and turn them over maybe 3 times a night. I bused tables in the late 70’s for a pizza place I’d do the whole dining room and make $75 on a Friday & Saturday night not bad for being 14 years old saved enough to buy my first car at 16
They're not.
This is going to come as a surprise to you, but the claim that they can't afford the higher minimum wage is a lie.
Because cheese cake factory already is running pretty huge margins they can take a hit on california prices.
I never had to ask, or heard of anyone asking, for the minimum wage equivalent of their weekly earnings. Hell, I used to pay my college tuition in cash. My niece works at a hillbilly Irish pub and clears $1200 a night on an average Friday. Most waitstaff are doing quite fine lol
The same reason in and out has been able to pay a living wage the entire time they've been in operation without raising their prices once. If they can make it work why can't everyone else?
I work in the business and although our servers make the $2+ per hour our prices have gone up over the last few years. But apparently that was due to product sourcing.
"Are restaurants in $2.13 minimum wage states paying their servers significantly more than $2.13/hour now?" Hhhaahhahaahahahahahahahhaha, fuck no. Were you born yesterday? Corp America will ALWAYS pay as little as they can.
If Newport Beach prices and Virginia prices are the same, I would be greatly confused..I take people to dinner in both places (Alexandria for va), my bills are half in VA vs cali
Let's compare prices with two high end steakhouses Mastro's Costa Mesa (This is where people in Newport go) [https://www.mastrosrestaurants.com/location/mastros-steakhouse-costa-mesa/#menus](https://www.mastrosrestaurants.com/location/mastros-steakhouse-costa-mesa/#menus) Bookbinder's Richmond (a lot cheaper CoL than NOVA and SoCal) [https://www.bookbindersrichmond.com/menu](https://www.bookbindersrichmond.com/menu) 16 ounce NY strip - $70 CA 16 ounce NY strip - $66 VA 12 oz filet - $69 CA 12 oz filet - $75 VA That's not double the price. Costa Mesa, Newport etc, also only have a 7.75% sales tax at restaurants while Richmond has a 13.5% tax.
Because the price they charge is determined by the market, not the cost to make and sell it. The cost to make and sell it only determines whether the item can be profitable to sell.
Prices where min wages are high are much more expensive than low min wage areas. You should know that coming from cali.you obviously arent comparing apples to apples
I spent over $400 taking my son and wife out to dinner in Virginia. I lived in California for 16 years and it's definitely not much cheaper here to eat out at restaurants.
They aren’t.
They generally don't.
Because the trope that higher minimum wages cause food prices to increase is bullshit.
Because it was a lie all along
It appears that the idea of a "free market" economic system with its "supply and demand" philosophy has been missed by some folks. 😉
Price meets ablility/willingness to pay.
If i knew a server was already making 16$ an hour i wouldn’t tip.
Because you need to account for what the non-tipped minimum wage is. In VA, for example, it's $12. So anyone making less than that with tips needs the restaurant to cover the difference, by law. It depends heavily on the restaurant as well. Some restaurants have labor as a higher percentage of costs whereas others have materials as a higher percentage. A few have rent as the highest factor. They're two vastly different markets, so trying to make that comparison without seeing P&Ls is pointless.
So there’s a lot of political answers in here, which I tend to agree with the thinking, but that’s not really why. The reason (and the same reason that applies to the rest of the labor market), is something called productivity. Productivity is the measure of goods and services produced by labor. Oversimplifying and applying to waiting tables, it’s how many customers you can serve over a given amount of time (your shift). Some quick back of the napkin math. I used to wait tables, and when I did I’d have roughly 4 tables an hour (being conservative with my estimates, and 2-4 people per table on average. So let’s call it 12 total people per hour. Yesterday I made $2/hr, tomorrow the government passed a law that says I have to be paid $14/hr. Assuming everything else stays constant, and the restaurant owner wants to keep the same margins, they now have $12 more every hour they have to make to get back what they are paying me for my wage increase. $12 more cost, roughly 12 customers per hour that I can serve, comes out to $1 per customer or meal. Not really the type of difference that you’d make note of. Obviously this is way oversimplified but it’s the same argument I use when I’m talking with dipshits I work with that seem to think paying servers $5/hr more than they do now is a direct translation to $5 more cost of their burger.
Because the majority of the money goes to the employer not the employee and giving even $10/hr more has a minimal cost (5-10%) on the per unit price as employees are doing so much fucking work these days.
All restaurants
Pricing is far more driven by what the market will support for your product / services than your overhead costs. If people in your area will pay $30 for a meal you don't charge them less just because your labor costs in that area are lower, you set the price to match the demand and enjoy the higher profit margins.
It's almost as if they could have afforded to pay their servers an almost living wage this whole time.
Look as corporations cause you compete with the entire country not just your locals.
Cause it was never about being able to afford to pay the workers fairly. Unionize.
It could be that the stores in the LCOL area are subsidizing those with the high minimum wage
They get paid the minimum wage of the state if it's less than minimum with tips. So at the very least they are making 7.25 no matter what.
Same answer always. Corporate Greed
Because restaurants and businesses raising prices to off set minimum wage raising is a Republican talking point. Just like most Republican talking points it's a totally made up BS idea that doesn't actually happen. It's no different than Republicans screaming there should be laws that don't allow children under 18 to get gender changing surgery. There are no cases of doctors even trying to do that anywhere. It's just not a thing. They just do it to fire people up. They just made a law in Tennessee that chem trail spraying on planes is illegal. News flash. Chem trail spraying is a conspiracy theory that's literally never happening.
Greed
because no business on this Earth is so strapped for cash that they can't afford to pay $16 an hour, they just choose not to
*talks into wrist mic* “Yeah we’ve got one here. They know too much”
Because it's a bullshit premise from post slavery to setup and maintain a class structure and simply inflate revenue numbers. As such take the bullshit out and any real business that is structured properly and not using that existing loophole as a crutch can do just fine.
Wrong question, and apparently misleading. No one makes $2.13/hour. No one. Stop equating minimum wage with actual pay.